· Dollar holds gains as fear of renewed pandemic gathers pace
The U.S. dollar touched a three-week high and commodity currencies were stalled on Monday, as renewed worries about a second wave of coronavirus infections sent investors into safer assets.
Moves were modest, as few expect spiking case numbers to prompt fresh lockdowns at this point.
But with the World Health Organization reporting a record increase in global cases on Sunday, especially in the Americas, and Apple Inc protectively closing 11 U.S. stores last week, there was no immediate cause for optimism either.
Against a basket of currencies, the dollar held on to small gains won last week and moved a whisker higher to 97.744, before edging back to flat.
The greenback was marginally lower against the Australian and New Zealand dollars, and steady on the yuan, euro and British pound.
The yen was firm at 106.92 per U.S. dollar, not far from a one-month high of 106.58 hit earlier this month.
Barclays expects continued pressure on the kiwi, but said gains in the euro are possible if Purchasing Managers Index (PMI) data due on Tuesday beats expectations and recommended going long on euro/dollar, with a $1.14 target.
The single currency last traded flat at $1.1176 after dipping to a three-week low of $1.1168 in early trade - squeezed as European Union leaders remain divided on how to structure a planned COVID-19 recovery fund.
The pound, weighted as well by Brexit worries since there has been little progress in trade discussions with Europe, held just above a three-week low at $1.2363.
· Fearing second COVID-19 wave, Europe aims to train "army" of medics
Europeans are enjoying the gradual easing of coronavirus lockdown measures, but in hospitals they are already preparing for the next wave of infections.
Some intensive care specialists are trying to hire more permanent staff. Others want to create a reservist “army” of medical professionals ready to be deployed wherever needed to work in wards with seriously ill patients.
European countries have been giving medics crash courses in how to deal with COVID-19 patients, and are now looking at ways to retrain staff to avoid shortages of key workers if there is a second wave of the novel coronavirus.
· EU and China to seek to cool tensions at video summit
The European Union and China will seek to cool tensions on Monday at a video summit, their first formal talks since ties soured over European accusations that Beijing has spread disinformation about the novel coronavirus.
European Commission President Ursula von der Leyen and European Council President Charles Michel - the EU’s chief executive and chairman - will hold video conferences with Premier Li Keqiang and President Xi Jinping.
“We are ready to work with China. But we also expect China to assume its responsibilities as one of the world’s largest economies,” said a senior official helping prepare the summit. “The pandemic has heightened some (EU) concerns.”
No joint statement is expected after the summit, scheduled to start at 0800 GMT.
· Bank of England's Bailey up-ends QE unwind policy
Bank of England Governor Andrew Bailey said on Monday that the central bank should start to reverse its quantitative easing asset purchases before raising interest rates on a sustained basis, a reversal of long-standing BoE policy.
The BoE increased its bond purchase target to 745 billion pounds ($922 billion) last week, and in March it cut its main interest rate to a record low 0.1%. But Bailey said this level of central bank asset purchases “shouldn’t always be taken for granted”.
· Oil dips as demand worries outweigh tighter supply
Oil prices slid on Monday as concern grew that a record rise in coronavirus infections worldwide could stall a recovery in fuel demand, outweighing tighter supplies from major producers.
Brent crude LCOc1 fell 10 cents, or 0.2%, to $42.04 a barrel by 0655 GMT, while U.S. crude CLc1 was at $39.72 a barrel, down 11 cents, or 0.3%.
Both contracts rose about 9% last week and Brent crude futures have flipped into backwardation, so that oil for immediate delivery costs more than that to be provided later, usually an indication of tightening supply. LCOc1-LCOc2
· “The market has entered a slight backwardation up to October. It times in with some of our estimates that by around November, the market could get really tight,” said Howie Lee, an economist at Singapore’s OCBC Bank.
“I find it more difficult for oil to move higher at this point, especially with the growing concern about second-wave contagion.”
Reference: CNBC, Reuters
Thai
Eng